Abengoa SA’s bonds and shares plunged after the Spanish renewable-energy company’s plan to shore up capital failed to reassure investors that it can
stop burning cash.
Abengoa said on Monday that it’s seeking to raise 650 million-euros ($713 million) of capital and dispose of 500 million euros of assets, according to a regulatory
filing. The Seville-based company stepped up disposal plans from 400 million euros as recently as Friday, when it also told investors that corporate free cash-flow for
2015 will be as much as 800 million euros lower than previously forecast.
The predicted shortfall is the latest in a series of announcements that have eroded trust in Abengoa’s accounting methods and ability to generate sufficient cash
to service its debt. The company, which spooked the market by reclassifying some bonds in November, has consolidated net debt that exceeds 6.5 billion euros.
“There were liquidity concerns before and this downward revision of corporate free cash flow guidance is disappointing,” said Felix Fischer, a credit analyst at
Lucror Analytics Pte Ltd. in Singapore. “The capital increase more or less just covers the shortfall. There are serious liquidity concerns for this company and bondholders
believe this measure isn’t sufficient.”
Bonds Plunge
The company’s 375 million euros of 7 percent notes maturing in April 2020 fell to the lowest since they issued, pushing the yield up to 17.2 percent, according to
data compiled by Bloomberg at 1:20 p.m. in London. Its 265 million euros of 5.5 percent notes maturing in October 2019 fell 10 cents on the euro to 65.5 cents, the lowest
since they were issued in September through its unit Abengoa Greenfield SA, according to data compiled by Bloomberg.
Abengoa’s class B shares fell more than 30 percent, the biggest intraday decline since November. They were at 1.54 euros, down 25 percent.
Abengoa said it will use proceeds from the planned share sale to reduce debt by 300 million euros. Existing shareholders will have preferential rights to buy the
new shares and Abengoa’s main shareholder, Inversion Corporativa IC SA, will participate in the sale with new funds.
“The equity increase gives the impression that the company urgently needs cash,” said Fischer. “They’ve not done enough to win back investors’ trust.”
Abengoa held a conference call with investors for almost three hours on Friday after reporting earnings. It said it will generate between 600 million euros and 800
million euros of cash this year, down from about 1.4 billion euros, according to a company presentation.
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